PUBLIC SUPPORT OF THE CULTURE Jana rozmarinová

Requirements requirements To visit permanent exhibition in Moravian gallery “La traviata” sightseeing tour in the center of Brno on 3th May seminar work + presentation written exam

Revision Definition of culture Definition of cultural economics Economic characteristics of cultural goods Cultural policy Cultural policy in the Czech Republic

Content Public support Yes or no? Levels of public support Forms of public support + a bit about private funding

Two aspects of public support POSITIVE – analyses extent of support by Government NORMATIVE –whether to support

Where the support is not needed? Film is generally considered self sufficient /profitable culture Theaters in the Czech Republic sufficient partly (28%) Galleries, museums and monuments - self-sufficient in an average of 18.2%

Government support of the arts in ten countries, 1994, direct spending in dollars per capita Finland 112 Germany 90 Sweden 65 France 57 Netherlands 48 Canada 44 United Kingdom 26 Australia 24 Ireland 9 United States 6

Public support Public support Direct Indirect – tax deductions, the higher the tax rate, the higher the willingess to give to the arts The difference between the two types of support? Where the decisions about size of support and its recipients is taken?

Public support of culture Should government support the culture? Arguments & Counter-arguments Group discussion Hint: Market failure (info asymmetries, non-competitive markets, externalities, public goods)

Should government support the arts? Arguments: Market failures on DEMAND SIDE External benefits of production and consumption Public good features (non-excludability, no rivalry in consumption) Non-market demand (national identity, prestige, social cohesion) Merit goods Irrationality of customers Lack of information – consumers badly informed about supply Income distribution

Should government support the arts? Arguments: Market failures on SUPPLY SIDE Imperfect competition (monopolistic features) Productivity lag (BAUMOL´S DISEASE) Income distribution (of artists)

Baumol´s cost disease Phenomenon discrabed by Bauml and Bowen in th 1960s Rise of salaries of musicians without productivity changes Rise of wages in automobile factory X in opera

Baumol´s cost disease Hypothetical illustration of productivity lag   1990 2000 Chang in % Automobile industry Output in automobile i. per work hour 20 24 +20 Wage per hour 10  12  Symphony orchestra Output measured by admissions per work hour 2 10 12

Should government support the arts? Counter-arguments: External effects is small or non -existent Income distribution is even worsen after the support still supports high-income population, as they are primary consumers Deviate from preferences of the population (own taste, re-election)

Sources for supporting culture Public support Direct Indirect Funding from private sources - finance may come from private sources – sponsorship, donations of money, goods and volunteer labour can be significant sources of support.

Amount of public support EU countries 0,7% of GDP, 1% of budget Considerable support But tiny compared to other sectors State (CZ – 0,5% budget) Local (Prague 5% of budget)

Forms of public support Direct vs. Indirect Historically – direct (after WW2) Now – diversity of various sources Direct and indirect sources of funding? Group discussion

We can make the general observation: The balance of public and private financing varies a lot between different countries: The proportion of private finance of culture is greater in the USA, Japan and the UK than in other European countries, Canada and Australia. Differs between countries is the role of non-profit organizations and their relative importance in the cultural sector There are the private for profit organizations that are financed from private capital and from sales revenues: Such as the cultural industries and Brodway and West End theatre

Culture budget – proportion of governmant spending Even in countries that spend relatively large amounts on public provision or subsidy of culture, the cultural budget is only a small proportion of government spending, often less than one per cent of the government budget.

Funding of culture State organizations - State-owned organizations, but still may receive funds from private sources (gifts, volunteering) Non-profit organizations - Role and relative importance is typically lower in continental Europe than elsewhere Private for profit organizations - are financed from private capital and from sales revenues (Broadway)

The main resources for supporting culture Direct Indirect resources Subsidies from public budgets Not from public budget Subsidies taxes Social contributions Subsidies with a contribution fees Tax reduces for donators   money from sales revenues Tax reduces for donees foundations and foundations funds other founds (state fund for czech cinematography) Communal obligations Donations and sponsorship Lottery and punts Flag days = public collections

We can make the general observation: The balance of public and private financing varies a lot between different countries: By and large, the proportion of private finance of culture is greater in the USA, Japan and the UK than in other European countries, Canada and Australia. Differs between countries is the role of non-profit organizations and their relative importance in the cultural sector: That is typically lower in continental Europe than elsewhere. There are the private for profit organizations that are financed from private capital and from sales revenues: Such as the cultural industries and Brodway and West End theatre

Presentation made by Daria Kuchařová A handbook of cultural economics. Edited by Ruth Towse. Cheltenham: Edward Elgar, 2003. Simona Škarabelová et al. Ekonomika kultury a masmédií. Brno: Masaryk University, 2007 Michelle Reeves. Measuring the economic and social impact of the arts: a review. London: Arts Council of England, 2002 National Cultural Policy Czech Republic 2009-2014. Ministry of Culture, Prague, 2009